ROCE, or return on capital employed, is a long-term profitability ratio that measures how efficiently a company uses its capital. The metric indicates the profit generated by each dollar (or other unit of currency) used.
ROCE is calculated by dividing earnings before interest and taxes (EBIT) by capital employed. In a ROCE calculation, capital employed refers to the total assets of the company after all liabilities have been deducted.

When calculating ROCE, use the following formula:

ROSE: operating earnings/capital employed

Return on Capital Employed (ROCE) is a financial metric that measures a company's profitability and efficiency in using its capital. It shows how well a company generates profits from its total capital (both equity and debt). The formula for ROCE is:

ROCE} =Earnings Before Interest and Tax (EBIT)/capital Employed x times 100


Capital employed refers to the total capital a company uses, usually calculated as total assets minus current liabilities.

A higher ROCE indicates that the company is using its capital more effectively to generate profits. This metric is particularly useful for comparing the performance of companies in capital-intensive industries, as it helps investors assess whether management is delivering good returns on the funds they control.